Local budget reallocations for climate-related projects

Context

Local authorities play a central role in achieving the ecological transition due to their competencies and the significant share of public investment they carry on. They are essential in sectors such as mobility, land use planning, and energy-efficient building renovations, all of which are critical to achieving carbon neutrality goals in France. 

According to the Overview of Climate Financing for French Local Authorities (I4CE & LBP, 2024), they need to increase their climate-related investments to €19 billion per year over the 2024-2030 period, which represents a doubling of current efforts. This substantial increase comes at a time of budgetary pressures and growing constraints on traditional funding sources such as debt, state support, and local revenues.

In this context, redirection, meaning the reallocation of non-climate-related investments toward actions that support the ecological transition, emerges as a strategic lever to reduce the financing needs of climate action. This approach is central to the Multi-Year Financing Strategy for the Energy Transition (SPAFTE), published by the French government in 2024, which highlights the “reorientation of non-green spending” as an almost exclusive lever for financing local climate action.

The Overview of Climate Financing for French Local Authorities (I4CE & LBP, 2024) underscores the emergence of a redirection dynamic in local government investments, with the share of climate-positive investments increasing from 9.5% in 2017 to 13% in 2023. However, the nature of the trade-offs being made remains unclear. Similarly, expenditures deemed “harmful to the climate,” seen as the primary source for reallocation, are poorly defined and quantified. While it is acknowledged that some of these expenditures fund “essential brown infrastructure” (Cour des Comptes, 2024), neither the purpose of these essential brown expenditures nor their volume is currently known.

Objectives

This project aims to clarify the concepts of expenditure “redirection” and “brown spending” by:

1. Identifying and quantifying brown expenditures, their purposes, and the flexibility local governments have to discontinue them;
2. Defining the various redirection mechanisms (e.g., mutualization, substitution, renunciation) and the conditions for their implementation;
3. Evaluating the financial impacts of trade-offs related to brown projects, including the costs of abandonment, transformation, and potential savings.

Period

Winter 2024 – Fall 2025